SANTA FE - New Mexico is receiving a windfall in government income as the oil industry comes roaring back, economists for the state told lawmakers on Thursday.

Revenue estimates were revised upward by $189 million for the current fiscal year and by $93 million for the coming year that starts July 1, largely due to rising oil prices combined with expanding production.

The new estimates give lawmakers more money to work with as they craft a spending plan for the coming year, and improve prospects for pay raises for teachers and state workers.

The Democrat-led Legislature and GOP Gov. Susana Martinez both have placed a high priority on increasing funding for the coming year to education, Medicaid, courts, law enforcement and economic development subsidies.

New Mexico is climbing out of fiscal crisis that last year prompted spending cuts at public universities and cherished programs such as the Special Olympics and local-farm produce at schools.

“It couldn’t have happened at a better time for us in New Mexico to have these new dollars,” said Democratic Rep. Patty Lundstrom, D-Gallup., chairwoman of the House finance and appropriations committee.

In all, government income is expected to surpass current annual spending obligations by $292 million during the coming fiscal year.

Republican House majority leader Nate Gentry said the new money should factor into compensation proposals, especially for teachers.

In the meantime, state reserves are expected to finish the current fiscal year at roughly $680 million — 11 percent of annual spending obligations. Reserves of at least 10 percent were recommended by a major credit ratings agency to protect state government operations from a mild recession and fluctuations in the oil and natural gas sectors.

New Mexico has climbed to third place among U.S. states in oil production, amid multibillion oil-lease investments within the Permian Basin in the southeast corner of the state.

Thursday’s upbeat financial report came with a sober warning that New Mexico state finances are more dependent than ever on the energy industry — and vulnerable to fluctuations in world oil markets.

Jon Clark, chief economist for the Legislative Finance Committee, cautioned members of a lead budget writing committee against commitments to permanent spending increases.

“This revenue increase today is attributable in the vast majority to oil and gas,” said Jon Clark, chief economist for the Legislative Finance Committee. “We are more dependent on oil and gas than we ever have been and it’s getting worse.”

Other bright spots on the economy include sustained growth in Albuquerque. Employment levels in New Mexico continues lag behind every state except Alaska.

The new fiscal forecast aligns revenues closely with the governor’s $6.3 billion general fund spending plan for the coming fiscal year — even if lawmakers reject a tax and health care reform proposal designed to raise an additional $99 million.

Martinez has proposed a $70 million increase in spending on public education, including annual bonuses of up to $10,000 for high-performance teachers. Lundstrom said this week that the bonuses are unlikely to be included in the House appropriations bill and are a policy matter better left to individual school districts to decide.

New Mexico channels nearly half of its general fund spending to public schools — a proposed $2.7 billion for the upcoming year.